Question

Please list and briefly describe the sources of income and uses of income.

Answer 1

There are four factors of production in an economy and they all earn income from the same source that is by selling those factors of production in the market. The labor gets wages, capital owner gets interest as income, land owner gets rent as income and the enterprise gets profit as income.

These income earned by these factors are same across the economy. These income are spend in the market to buy the goods that were produced by combining all the factors of production and engaging in the economic activity. Like people buy goods to satisfy their needs or demands in the economy.